Tax revenue forecast higher than last year
By Kevin Dayton
Advertiser Capitol Bureau Chief
A panel of economists is projecting that the state will collect about $185 million more in taxes this year than last year — an increase that would ease the budget crunch somewhat.
The state Council on Revenues, which is responsible for predicting how much money the state will gather in taxes each year, issued new estimates yesterday that tax collections will grow by 6.1 percent in the fiscal year that began July 1.
While that sounds like robust growth, the upward projection is partly a reflection of last year's sudden decline in tax collections after the Sept. 11 terrorist attacks.
General treasury tax collections in the fiscal year that end June 30 actually declined by almost 3.5 percent from the previous year — from $3.16 billion to $3.05 billion.
Now the Council of Revenues is forecasting that tax collections will bounce back to about $3.23 billion this year.
Michael Sklarz, chairman of the council, said several economic factors are driving the projected increase in tax collections this year.
"Real estate and construction are very strong," he said. "You see numbers coming out that are as high as the numbers back in the last peak in the market, so that's all very positive."
A recent Bank of Hawaii survey also found that business confidence is improving, he said.
"The one wrinkle seems to be the visitor arrivals, and that's primarily the Japanese visitor because the westbound visitors are very strong, so I think that's really the only fly in the ointment," he said.
Sklarz said the council's new projections assume that the pattern will continue, with a strong showing by visitors from the Mainland and relatively weak trends for Japanese tourism.
The new estimates by the council will serve as the basis for the new state budget. The poor tax collections last year sparked concerns that a new round of spending cuts might be necessary in the state's next budget.
Reach Kevin Dayton at kdayton@honoluluadvertiser.com or 525-8070.
